Rental Income - effect on benefits

aprilshowers23

I own a property which has been rented out for the past 18 months. I'm getting made redundant (90 day notice period will start end of March). Since I rented out the house (mortgaged but there is equity in it) I have also rented myself. My last tax return (January) showed a loss. My question is, when I come to claiming benefits will I be able to claim housing benefit and council tax benefit for the property I am currently living in? As I haven't made any profit will the whole amount still be counted as income? I keep getting different answers on this. Anyone found themselves in the same circumstance and able to offer me advice?

Teahfc

Would be amazed if you can own and rent a house out and then expect the tax payer to foot the bill for you to rent another place.

CIS

You wont be eligible for housing benefit with the 2nd property - it will be regarded as capital.

paddyz

I think that should not be allowed to happen, You could argue that you would be able to claim the interest on your owned home if you was living there but id guess the tenant most likely pays more than that so you would be quids in if you ended up getting HB in your current home.

If i remember right one question on HB forms asks about any property ownership ? so not even sure if they would pay HB.

shikoku

goffo wrote: »

Not exactly true.

If, as the OP has said he is running it as a business enterprise - property developer, the property is now a business asset.

As such, you can't surely expect him to sell his business assets to fund his rented property?

He has to live somewhere and cannot live in one of the business properties. So yes as long as he is careful how he describes the property, how it has been dealt with in his accounts - he can obtain housing benefit!

Likewise the losses that he is creating with the property empire are available to be carried back against previous tax payments and get a tax refund or carried forward to offset any future tax liabilities.
In addition if he was savvy enough he would use the property development business as a means to obtain capital assets - car, computer etc and create even more losses than he has, thereby creating a greater tax repaymnet.
Using that method of buying or leasing capital assets, he would get tax relief on them whereas the ordinary man in the street wouldn't. Not bad - minimum relief at 20% of cost!

What you are suggesting is benefit fraud which can carry a custodial sentence these days.

real1314

shikoku wrote: »

What you are suggesting is benefit fraud which can carry a custodial sentence these days.

I don't think much of that would be benefit fraud, but then again it isn't likely to work.
Whilst the "property business" might be able to spend some money on business toold (1 PC), a business with just 1 property needing a car might be seen as a little dis-proportionate by HMRC, and it would create a personal tax liability if used for personal use at any time.

It is possible to claim HB whilst "owning" another property, and it would be treated as a capital asset; the value would be net of any mortgage.
The income would be treated as any other income, but the mortgage interest element would be disregarded.

healy

shikoku wrote: »

What you are suggesting is benefit fraud which can carry a custodial sentence these days.

Andy is no stranger to that!

Jowo_2

I don't know the answer to be honest, but they may know at Shelter, who give free advice to tenants, or perhaps your local council can let you know.

welshmoneylover

aprilshowers23 wrote: »

I own a property which has been rented out for the past 18 months. I'm getting made redundant (90 day notice period will start end of March). Since I rented out the house (mortgaged but there is equity in it) I have also rented myself. My last tax return (January) showed a loss. My question is, when I come to claiming benefits will I be able to claim housing benefit and council tax benefit for the property I am currently living in? As I haven't made any profit will the whole amount still be counted as income? I keep getting different answers on this. Anyone found themselves in the same circumstance and able to offer me advice?

Seeing as you have 90 days to sort it out, can't you terminate the tenancy of your tenants so you'd have a roof over your own head?

Oldernotwiser

healy wrote: »

Andy is no stranger to that!

And, of course, he used to be an accountant!

Oldernotwiser

goffo wrote: »

I think you need to see a qualified chartered accountant to check that out!

!

Because, as you prove so well, accountants are such experts on benefits!